This blog highlights the impressive returns we received for many of our clients back in 2020-21. By utilizing the uncapped accounts that many Indexed Universal Life products have, we were able to capture a return of over 61%. Through the uncapped accounts, Indexed Universal Life does not have to be restrictive when it comes to growth, but can result in significant growth when the market soars.
What can Indexed Universal Life do for you, you ask? Well let us show you.
If you’re not familiar with indexed universal life, here’s a quick introduction.
Indexed Universal Life is a permanent type of life insurance product that has so called “floors” and “caps” that are typically tied to a stock market index, such as the S&P 500. The floor is there to protect from market declines, so when the market goes down, the account credits the floor, which typically is between 0-2%. In exchange, when the market soars, you get credited the cap, typically 8-12%. When an individual pays a premium, part of the premium goes towards paying for the insurance for the individual, and part of it goes into an account tied to the market. Most carriers offer several different account options, which allows the individual and/or broker to strategically allocate depending on how the market is behaving.
Now to the magic.
During the March 2020 market crash, the S&P fell to a close of 2,386.13 on March 16th. Fast forward a year, and the close a year later was 3,968.94, a whopping 66.33% growth. Well, what were clients of SKA credited?
Some clients had their money in no cap accounts, meaning that there is no cap. What’s the catch? The catch is what’s called a spread. A spread is a buffer between the growth and the actual credited amount. For example, if the growth is 20% and there is a spread of 5% in a no cap account, the client gets credited 15%. Well in the case above, you can see that clients were getting credited 61.33%. 61.33% growth with downside protection, sign me up.
Contact us today to discuss if Indexed Universal Life is right for you!
(559) 322-2230
Comentarios